BoE Governor Andrew Bailey Says Crypto Investors Trading In A Bubble
- Andrew Bailey’s public criticism of cryptocurrencies is well known, and the crypto detractor has not let up.
- In a recent event, Bailey said crypto investors might see their investments go down the drain.
Crypto Has No Intrinsic Value
The Bank of England (BoE) Governor Andrew Bailey reiterated his earlier remarks that crypto investors should be prepared to lose all their money, per CNBC reports.
According to Bailey, crypto-assets generally do not have any intrinsic value, and their value proposition is zero.
The BoE governor has long been a critic of the nascent industry and was once quoted as saying that investors should be ready to see their investments erode. The first criticism was during the 2017 rally of Bitcoin. The digital asset, which traded as high as $20,000 then, subsequently dropped to a meager $3,122 in the opening months of 2018.
However, Bitcoin has made significant all-time highs (ATHs) in the past two years, rallying 80% since the beginning of the year but Bailey is not having any of it.
“I’m going to say this very bluntly again,” he added. “Buy them only if you’re prepared to lose all your money.”
Bailey’s comments closely resemble the Financial Conduct Authority’s (FCA) take on cryptocurrencies. The UK regulatory agency cautioned investors on trading cryptocurrencies in a released statement and said they might see their funds erode given the asset class's volatility.
But this bad take does not seem to faze crypto investors who are most keen on the massive returns these virtual currencies bring.
Bitcoin itself has brought recognition to the crypto market and institutional investors now see it as a hedge against inflation.
Ethereum, the second most valuable cryptocurrency by market cap, has climbed 360% since the beginning of the bull run after making new all-time highs, and even meme-based cryptocurrency Dogecoin has not been left out, posting a whopping 12,700% increase since the turn of the year.
Blockchain To Be Used In CBDC Design
Despite the many criticisms that trial cryptocurrencies, many central banks are looking to leverage the potential upsides blockchain affords to create central bank digital currencies (CBDCs).
CBDCs would be state-sanctioned and state-issued. They will also be equivalent to the fiat currency of the host country, only that they will be in digital format. Many national banks are already developing the digital form of their fiat currency, with Asian giant China leading in the race of wholesale CBDC use.